Lebanon debt may surge to $47bn

Beirut, January 3, 2009

Lebanon's public debt last year is expected to have reached $47 billion, the country's finance minister Mohammad Chatah said.

Lebanon's gross public debt stood at around $45.65 billion at the end of September last year, the minister was quoted as saying by Al Hayat newspaper on Friday.

Chatah had said in September that debt would reach $49bn if privatisation of two state-owned mobile phone companies did not go ahead. Chatah did not provide an estimate for this year's public debt.

The Lebanese government last month postponed the much-delayed privatisation because of global market conditions.

The proceeds were supposed to pay down some of Lebanon's massive public debt, which is equivalent to some 170 per cent of gross domestic product.

Servicing the debt is a major strain on Lebanon's public finances.

Chatah reiterated that Lebanon's robust banking sector remained relatively unexposed to the financial crisis but said that Lebanon's economy would be mostly affected by the adverse economic environment in the Gulf region.

Chatah said expectations for economic growth forecast this year would be between 3-4pc, revised down from 5pc.

About a third of the Lebanese workforce are employed in Gulf states, including the UAE and Saudi Arabia which have been strongly affected by the financial crisis and a steep drop in oil prices.

Some Lebanese have already started returning from the Gulf, laid off by employers who have been forced to slash jobs to deal with the financial crisis.

Chatah said he had 'no accurate numbers' about how many Lebanese would lose their jobs, but 'assumed that the number is limited'. Lebanese working in the Gulf support the domestic economy through remittances, property purchases and regular trips home.